***Guest Appearance
Credits to:
https://www.youtube.com/watch?v=Xdxd-H6gMPI
“How to Raise Private Money for Real Estate Without Banks – EP 22”
https://www.youtube.com/@kfalker
The world of real estate is often synonymous with big banks, endless paperwork, and the looming fear of being denied essential funding at the last minute. But what if the traditional approach to financing a property acquisition wasn’t the only— or best—way? On a recent episode of the Raising Private Money podcast, Jay Conner broke down his journey from relying on banks to pioneering the use of private money for real estate deals, opening new doors for investors everywhere.
The Frustration with Traditional Funding
Jay’s real estate story began by following the tried-and-true path of working with local banks and mortgage companies. For six years, this was his only option. But things quickly changed during the financial crisis in 2009, when his line of credit suddenly evaporated without warning. This unexpected hurdle forced Jay to rethink his entire funding strategy. Instead of panicking, he chose to seek out solutions and new connections, leading him to the concept of private money lending.
The Shift to Private Money
The turning point came from a conversation with a seasoned friend who introduced him to the world of private lending and self-directed IRAs. The idea was simple: individuals, not institutions, could become lenders by using their investment capital or retirement funds. The process could be tax-advantaged and offer investors a higher return on their money than what they’d get sitting in a traditional bank account.
By attending a real estate investing conference to learn more, Jay immediately adopted the role of a teacher. Rather than just searching for lenders, he educated his own professional and social circles about how private lending works. This strategy was so effective that he raised over $2 million in private funds within his first 90 days.
How Private Money Works in Jay’s Model
Jay’s strategy focuses on single-family homes, although he notes private money can be used for larger projects as well. The key difference with his method is the “one-off” model—rather than pooling funds into a single pot, each property is funded by specific private lenders, secured by asset-backed debt.
Private lenders in Jay’s model are protected in the same ways banks are. They receive promissory notes, mortgages, or deeds of trust, are listed as mortgagees on insurance policies, and are named in title policies as additional insured parties. If the borrower defaults, the lender’s recourse is foreclosure on a property whose loan never exceeds 75% of its after-repaired value, giving the lender significant security and potential upside.
The simplicity is part of the appeal: real estate investors pay private lenders like they would a bank—through mortgage payments or, in the case of property flips, accrued interest paid out at closing. Lenders don’t speculate on property appreciation; instead, they receive steady interest—often more than what’s available via other low-risk investments.
Sourcing Private Lenders
Finding private lenders involves targeting three key groups: your own network of connections, an expanded market as your business grows, and existing private lenders in the space. Jay emphasizes that his early successes all came from his immediate network—demonstrating the power of simply sharing the opportunity without attaching it to a specific deal.
Importantly, Jay isn’t pitching properties. He teaches potential lenders about his underwriting criteria and the maximum loan-to-value ratios up front, fostering trust and transparency. When a deal comes up, the tone is more “good news” call than sales pitch.
Private Money for Every Investor
This approach isn’t just for those flipping homes. Jay routinely uses private money for both short-term flips and long-term rental investments, and even notes that his private lenders sometimes get better rates through his deals than they’d get putting money in a bank certificate of deposit.
For realtors, this strategy offers a powerful value-add for their clients and, potentially, for their own portfolios. Empowered with private lending knowledge, agents can help investors close more deals, more quickly, and with far less red tape.
Building a Network, Building Opportunity
Jay’s journey highlights a bigger lesson: when your financial strategy is flexible and your network broad, you create resilience against market uncertainties. For those looking to enter or grow in real estate investment, understanding the power of private money could be the game-changer that allows you to buy more properties and help more people—without ever waiting for a bank’s permission.
10 Discussion Questions from this Episode:
- What are the main protections given to private lenders in real estate transactions, and how do they compare to those offered to traditional banks, according to Jay Conner?
- Jay Conner mentions that “desperation has a smell to it” when raising private capital. How can investors present opportunities to private lenders without appearing desperate?
- How did the 2009 global financial crisis influence Jay Conner’s approach to real estate investing and funding?
- What are the differences between using a fund for large projects and “one-off” asset-backed debt for single-family properties? Why does Jay Conner prefer the latter?
- In what ways can real estate agents utilize private money lending to better serve their investor clients or grow their own portfolios, as suggested by Jay Conner?
- What are the benefits and potential risks for private lenders when investing in real estate deals with individuals rather than institutions?
- How does Jay Conner recommend finding and building relationships with new private lenders beyond one’s immediate network?
- What is the rationale behind only borrowing up to 75% of the after-repaired value (ARV), and how does this protect both the borrower and lender?
- How does Jay Conner say Business Networking International (BNI) can help new investors or businesspeople quickly scale their networks in an unfamiliar city?
- Why does Jay Conner argue that “getting the money lined up” before finding a deal is superior to the common advice of “get the deal under contract, the money will show up”?
Fun facts that were revealed in the episode:
- Jay Conner started his real estate investing career in 2003, but it wasn’t until a bank unexpectedly cut his line of credit in 2009 that he discovered the game-changing power of private money for funding deals.
- Instead of pooling funds like many commercial or multi-family investors, Jay Conner prefers using an “asset-backed one-off” approach for single-family homes, where individual private lenders fund deals secured by a mortgage or deed of trust, giving them the same protections as a traditional bank.
- If you attend one of Jay Conner’s live Private Money Conferences, held three times a year in eastern North Carolina, you’ll score both an autographed copy of his book and a chance to learn from someone who’s raised over $2 million in private funding in just 90 days.
Timestamps:
00:00 Discovering private lending strategy
05:36 Learning about private money options
07:19 Networking without desperation
09:39 How private lending works
13:48 Funding a real estate deal
18:04 Free signed book offer
20:11 Private lender rates vs. market rates
23:02 Wrapping up with Jay’s advice
Free Report:
https://www.jayconner.com/MoneyReport
Join the Private Money Academy:
https://www.JayConner.com/trial/
Have you read Jay’s new book, Where to Get the Money Now?
It is available FREE (all you pay is the shipping and handling) at
https://www.JayConner.com/Book
What is Private Money? Real Estate Investing with Jay Conner
https://www.JayConner.com/MoneyPodcast
Jay Conner is a proven real estate investment leader. He maximizes creative methods to buy and sell properties with profits averaging $67,000 per deal without using his money or credit.
What is Real Estate Investing? Live Private Money Academy Conference
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